The EPA Seeks to Regulate Carbon Emissions from Existing Power Plants

On June 2, 2014, the Environmental Protection Agency (“EPA”) introduced new rules – via a 645 page proposal – designed to reduce the emission of carbon and other greenhouse gases (“GHGs”) from existing power plants. Although this is the first time the EPA has proposed such standards, the EPA claims that it is empowered to do so under the ambiguous provisions set forth in Section 111(d) of the Clean Air Act (“CAA”), 42 U.S.C. § 7411(d).

Under the EPA’s proposed rules, each state is given autonomy to cut existing power plants’ GHG emissions as it sees fit through a combination of utility efficiency programs, renewable energy procurement, on-site pollution controls, and regional cap-and-trade programs. Collectively, the states will be required to reduce such emissions by 30 percent by 2030, as measured from 2005 emission levels. The reduction requirements for each state vary, and are based on factors such as each state’s reliance on fossil fuels and its ability to transition to cleaner energy. New Jersey and New York will each be required to reduce their emission rates by more than 43 percent from 2012 levels.

While the EPA’s proposed new rules are almost certain to face legal challenges, recent United States Supreme Court decisions suggest that any system implemented by the EPA to reduce the amount of GHGs released from power plants will receive judicial deference. See, e.g., American Electric Power Co, Inc.. v. Connecticut, 131 S.Ct 2527 (2011) where the Court specifically recognized that the EPA is vested with authority to regulate power plants’ GHG emissions under Section 111 of the CAA. Similarly, in a recent decision, EPA v. EME Homer City Generation, LP, the Supreme Court upheld EPA’s Transport Rule, finding that it was appropriate to defer to EPA’s expertise in crafting a method of implementing the “Good Neighbor” provision of the CAA to reduce pollution from upwind states onto their downwind neighbors. (See John H. Klock’s blog, U.S. Supreme Court Gives Downwind States Breathing Room Under the Clean Air Act, discussing this decision).

The EPA plans to finalize the proposed rules in June 2015. And in June 2016 — and assuming no additional extensions are granted — the states will be required to submit their implementation plans. States that fail to do so will be subject to the EPA’s imposition of a federal implementation plan. Public comments on the current proposal for existing plants will be accepted for 120 days after publication of the proposal in the Federal Register, which will likely occur in the next several weeks. Four public hearings on the proposed rules are scheduled for the week of July 28 in Denver, Atlanta, Pittsburgh, and Washington, DC.

Assuming the EPA’s new rules survive potential legal challenges, in relying on Section 111(d) of the CAA to reduce GHG emissions from the electricity generation industry, the EPA has set a precedent for applying similar rules to other stationary carbon-emitting industries, such as oil and gas, steel, and cement.

Susanne Peticolas, a Director in the Gibbons Real Property & Environmental Department, co-authored this post.
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